Clydesdale and Yorkshire see drop

Clydesdale and Yorkshire have seen customer numbers rise

The Clydesdale Bank and Yorkshire Bank group has reported a sharp fall in profits for the year covering the worst of the banking crisis.

However, with a growing share of the savings market and pledge to lend £10bn over the next two years, its bosses say it is well placed for future growth.

The Glasgow-based Clydesdale Bank and Yorkshire Bank, run from Leeds, are part of National Australia Bank (NAB).

The Australian owners have reported net profits down 43%.

It said its British subsidiary showed "considerable resilience" in the face of the UK recession.

British pre-tax profits in the year to 30 September were down 69% from £343m to £108m. In a statement issued at the start of the Australian trading day, the company pointed out its UK high street rivals had reported impairments of £67bn.

Independent of government capital support, we remain profitable, well capitalised and with clear underlying strength Lynne Peacock Chief executive of Clydesdale and Yorkshire Banks

Provision for bad and doubtful debts at Yorkshire - 150 years old this year - and Clydesdale rose by £175m to £421m. However, it reported no exposure to sub-prime or self-certified mortgages, which have caused heavy losses for less conservative rivals.

Mortgage arrears were reported at less than a third of the UK industry average. Home repossessions were put at only 84 in 12 months, compared with more than 24,000 across the rest of the UK banking industry in the first six months of 2009.

Its retail deposits increased by 14% to £20.8bn - four times the industry average - suggesting the banks benefited from concerns over the security of savings at its rivals. Clydesdale and Yorkshire ended their financial year with 50,000 more customers than when it began.

Clydesdale has less than 15% of the Scottish market, where Royal Bank of Scotland and Bank of Scotland dominate. Both those rivals now have large government stakes as a result of bail-outs last in October last year.

'Prudent credit'

The performance was despite receiving a credit rating downgrade earlier this year.

Lynne Peacock, chief executive of Clydesdale and Yorkshire Banks, said: "We've kept our business safe, secure and in the best possible shape by maintaining a strong capital position and supporting our customers in these challenging times. We're now moving up a gear.

"Today we are pledging £10bn of new lending to support business and mortgage customers over the next two years. In achieving this, we will maintain our prudent credit and asset quality controls, just as we have in over £4bn of new lending in the past year.

"Independent of government capital support, we remain profitable, well capitalised and with clear underlying strength. The fundamentals of our business are srong and we are well positioned to capitalise on future growth opportunities."

Yorkshire has 188 branches and Clydesdale has 152. The group employs the equivalent of 4,500 staff in England, nearly half in Yorkshire, and 3,700 in Scotland, mostly in Glasgow and Clydebank.

As well as Australia, NAB also operates in New Zealand and last year it bought Great Western Bank in the US, with a specialism in agriculture finance.